DAILY MORNING NOTE | 3 October 2023

Singapore shares slipped on Monday (Oct 2), ending the first trading day of the fourth quarter in the red. It retreated 0.3 per cent or 8.55 points to 3,208.86. Across the broader market, decliners outnumbered advancers 200 to 184, with 950.5 million securities worth S$782.9 million changing hands.

Wall Street stocks finished mixed on Monday despite the US government striking a deal to avert a shutdown, while Treasury yields rose. The Dow Jones Industrial Average slipped 0.2 per cent to close at 33,433.35. The broad-based S&P 500 was flat at 4,288.39, while the tech-rich Nasdaq Composite Index advanced 0.7 per cent at 13,307.77.

SG

Offshore oil and gas contractor Dyna-Mac on Monday (Oct 2) said it had secured several contracts worth a total provisional sum of S$88 million from repeat customers. These new orders will increase its net order book to S$630.7 million, with project delivery stretching into 2025. The main contract involves the construction of topside modules for a floating production storage offloading (FPSO) vessel. It added that construction of the topside modules begins in the first quarter of 2024 and will use new yard space that it recently secured. The project is scheduled to complete in Q3 2025. The modules will be shipped to China for integration with the vessel after that. Dyna-Mac said the other contracts include executing the fabrication, installation and integration work on vessels.

Healthcare provider Raffles Medical Group (RMG) on Monday (Oct 2) said it had acquired a majority interest in American International Hospital (AIH) in Ho Chi Minh City, Vietnam. This follows a strategic partnership agreement RMG entered into with My My Trading Services Company, subject to the fulfilment of certain conditions and obtaining the relevant approvals, the group said in a bourse filing. The valuation of AIH was arrived at on a “willing-buyer and willing-seller” basis, after taking into account the valuation of the hospital asset of US$45.6 million – within range of a valuation by Savills Vietnam, said RMG, which commissioned the assessment in July. The group expects to fund the cash consideration from “internally generated resources”, the company added, without disclosing the acquisition value. Part of the agreement entails RMG entering into a management-service agreement to manage AIH’s operations.

The average return per year for the latest tranche of the Singapore Savings Bond (SSB) has reached a new year-to-date high of 3.32 per cent. The October tranche of bonds, to be issued in November, has a first-year interest rate of 3.21 per cent. Interest rate at the 10-year mark stands at 3.63 per cent. The allotment size is S$1 billion, with investment amounts starting at S$500 and issued in multiples of S$500. Applications for the bonds will open at 6 pm on Monday (Oct 2) and close at 9 pm on Oct 26.

US

Tesla missed market estimates for third-quarter deliveries on Monday (Oct 2) as the carmaker was forced to curb production due to planned factory shutdowns, sending its shares down 3.7 per cent in trading before the bell. The electric-vehicle maker handed over 435,059 vehicles in the three months to Sep 30, down nearly 7 per cent from the preceding quarter. The world’s most valuable carmaker produced 430,488 vehicles in the third quarter, compared with 479,700 in the second quarter and 365,923 a year earlier.

Oil prices fell about 2 per cent on Monday to a three-week low as a higher-priced Brent contract expired, the US dollar strengthened and traders took profits, concerned about rising crude supplies and pressure on demand from high interest rates. On its first day as the front-month, Brent futures for December delivery settled US$1.49, or 1.6 per cent, lower at US$90.71 a barrel, or down about 5 per cent from where the November contract expired on Friday. That was the Brent front-month’s biggest daily percentage decline since early May. US West Texas Intermediate crude (WTI), meanwhile, fell US$1.97, or 2.2 per cent, to settle at US$88.82 per barrel.

Rivian Automotive on Monday reported record third-quarter electric vehicle deliveries and said it remains on track to produce 52,000 EVs in 2023. The company said it delivered 15,564 vehicles during the period, up 23% from the second quarter of 2023 and ahead of Wall Street estimates. Analysts surveyed by FactSet had expected Rivian to deliver about 14,000 vehicles in the quarter, on average. Rivian produced 16,304 vehicles during the third quarter, all at its factory in Normal, Illinois. Shares ended the day down over 2% on Monday.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR

RESEARCH REPORTS

Phillip 4Q23 Singapore Strategy – Next comes the fiscal hangover

Analyst: Paul Chew

– Singapore’s equity market was up a meagre 0.4% in 3Q23.

– US economy has been propped up by an additional US$1tr of fiscal deficit spending. We see multiple headwinds to growth approaching including depleting pandemic savings, lower social security spending, resumption of student debt repayment, elevated real interest rates and a slower growth in China.

– We remain cautious on Singapore equities and anchor our equity strategy on dividend yield and non-cyclical stocks. In our model portfolio we added ST Engineering and Singtel.

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